Thailand Set To Double Gold Imports

Gold managed to snap its three day decline yesterday but continues to trade in a narrow range as it awaits further market developments. With no major announcements, data or geopolitical developments expected this week, it seems the price continues to dwell on last week’s Fed announcement. Yesterday’s slightly better performance was thanks to the consumer confidence index and the Richmond Business survey, both of which suggested a weak economic outlook.

When the gold price fell in April and again in June, there was a widely reported buying frenzy across Asia. Many have been left wondering why this is not happening once again. Both India and China are heading into festival season. Chinese markets will be closed next week for a week-long holiday, after this we expect to demand pick up. In India, rules on exports and imports have just been clarified, ahead of both wedding and festival season.

Fed and gold trading

You may have read about the suspiciously quick trading of gold futures following the FOMC decision last Wednesday, note: decision not announcement. Questions have been raised about the speed at which gold futures reacted to the announcement. Many believe information was leaked by journalists during the lockup period that comes between them being informed by the FOMC of their decision and the official announcement.

Bernanke’s rumour mill

It seems Ben Bernanke likes to reassure the markets of one thing but then picks a few Fed Presidents to then head out and start the rumour mill. One of his favourites is probably William Dudley who told CNBC yesterday that tapering could start this year and the Fed could be done with bond-buying altogether by the end of 2014.

ECB helps gold price in long-term

In the long-term the ECB look ready to provide some upside for gold. Yesterday officials from the single currency union said that they would consider implementing further easy monetary policies. Whilst Draghi refrained from reiterating his ‘whatever it takes’ promise last week, it seems that Fed officials are keen to keep it in the public mindset.

Thailand on course for 200t

Thailand’s biggest gold importer, YLG Bullion International Co, expects to see purchases double this year thanks to the low gold price. Having imported 92 tons last year, the company predicts it will see imports of around 200 tons for 2013. The first six months of the year saw imports of 112 tons, 60 per cent of the total imported by Thailand. CEO of YLG believes demand will continue to grow, ‘because collecting gold is in our culture.’

Turkey continues to buy gold

It’s that time again when the IMF release the updated gold reserves. Last month Turkey topped the list of buyers after increasing its gold holdings by over 23 tons. Whilst overall bank buying was down in August, only 8 banks increased holdings compared to 15 in July, this trend continues to show that central banks view gold as a safe asset in the long-term.